\nTrex Company, Inc. (NYSE:TREX), the world\u2019s largest manufacturer of wood-alternative decking and railing products and a leader in outdoor living products, today announced financial results for its fourth quarter and full year of 2024.<\/p>\n
2024 Fourth Quarter Financial Highlights<\/span><\/b><\/p>\n 2024 Full Year Financial Highlights<\/span><\/b><\/p>\n CEO Comments<\/span><\/b><\/p>\n \n\u201cThe continued strong performance of our premium product lines and stable sequential demand trends for our value-priced products led to fourth quarter sales above our expectations, enabling us to exceed our full year revenue guidance. The significant EBITDA outperformance in the fourth quarter demonstrated the positive leverage of our business model on higher utilization, driven, in part, by our year-end inventory build, as well as the benefits of our continuous cost-out programs,\u201d said Bryan Fairbanks, President and CEO.<\/p>\n \n\u201cIn 2024, we delivered on several key strategic priorities including the introduction of a record number of new decking, railing, and fastener products, and securing commitments from many of our exclusive decking distributors to also be exclusive distributors for Trex railing products. Our investments in product development continue to yield positive results. Products launched within the last 36 months represented approximately 18% of 2024 revenues, and new products will continue to be an important growth driver for Trex. We are especially pleased by the positive consumer response to our proprietary heat-mitigating technology* branded as \u2018SunComfortable\u2019\u2122<\/sup>. This technology was first introduced in our 2022 launch of Trex Transcend\u00ae<\/sup> Lineage\u00ae<\/sup> and was included in our 2024 launch of two new colors of the Trex Enhance\u00ae<\/sup> decking line. Given the positive response to this innovative technology, we plan to incorporate this popular feature in future products currently being developed as part of our \u201cPerformance-Engineered for Your Life Outdoors<\/i>\u201d campaign.<\/p>\n \n\u201cIn addition to developing new decking products, we accelerated the pace of new railing product introductions to significantly increase our penetration of the $3.3 billion railing market. Among the products that will be available for the 2025 season are the new Trex Enhance\u2122<\/sup> steel, Trex Select\u2122<\/sup> aluminum, Trex Signature\u00ae<\/sup> X-Series\u2122<\/sup> cable and frameless glass railing systems, in addition to enhancements to the Trex Select\u00ae<\/sup> composite railing system that is priced to compete with vinyl railing. This expanded railing portfolio has convinced many of our distributors, dealers and contractors to fully align their business with both Trex\u00ae<\/sup> decking and railing, which we believe will have a multiplier effect on our future decking and railing sales,\u201d Mr. Fairbanks noted.<\/p>\n Fourth Quarter 2024 Results<\/span><\/b><\/p>\n \nFourth quarter 2024 net sales were $168 million, a decrease of 14.4% compared to $196 million reported in the prior-year quarter, impacted by a reduction in channel inventory of approximately $45 million.<\/p>\n \nGross profit was $55 million and gross margin was 32.7%. This compares to gross profit of $71 million and gross margin of 36.1% in last year\u2019s fourth quarter.<\/p>\n \nSelling, general, and administrative expenses were $39 million, or 23.4% of net sales, compared to $43 million, or 21.7% of net sales, in the 2023 fourth quarter.<\/p>\n \nNet income for the 2024 fourth quarter was $10 million, or $0.09 per diluted share, compared to $22 million, or $0.20 per diluted share, reported in the 2023 fourth quarter. EBITDA was $29 million down from $41 million, and EBITDA margin contracted 380 basis points to 17.2% from 21% in the prior year period.<\/p>\n Full Year 2024 Results<\/span><\/b><\/p>\n \nFull year consolidated net sales increased 5.2% to $1.2 billion from $1.1 billion in the year-ago period. Gross profit was $486 million and gross margin was 42.2%, up 7.4% and 90 basis points, respectively, from the $452 million and 41.3% during the same period in 2023.<\/p>\n \nSelling, general, and administrative expenses were $180 million, or 15.6% of net sales, compared to $176 million, or 16.1% of net sales, in the year-ago period.<\/p>\n \nFull year 2024 net income was $226 million, or $2.09 per share, representing 10.2% growth from $205 million, or $1.89 per share, in 2023. EBITDA was $360 million, up 10.4% from $326 million in the prior year. EBITDA margin expanded by 150 basis points to 31.3% from 29.8% in 2023.<\/p>\n Recent Developments & Recognitions<\/span><\/b><\/p>\n Summary and Outlook<\/span><\/b><\/p>\n \n\u201cWe continue to see positive Residential sell-through growth, strong contractor backlogs, and favorable customer surveys, that all suggest optimism as we head into 2025. Our outlook anticipates continued strong sell-through of Trex premium decking products, improved demand for Trex entry-level decking products, and double-digit growth in railing product sales, amid a Repair & Remodel market that is expected to be flat with 2024 levels.<\/p>\n \nFor full year 2025, Trex expects net sales to range from $1.21 billion to $1.23 billion, representing year-on-year growth of 6% at the midpoint. Adjusted EBITDA, which excludes one-time costs related to Arkansas start-up, digital transformation and the railing transition, is expected in the $378 million to $385 million range, inclusive of continued elevated investments in branding and product innovation. Adjusted EBITDA margin is expected to exceed 31%, consistent with 2024 despite the increased investment levels.<\/p>\n \n\u201cIn the second half of 2024, we revised our inventory strategy to reduce the quarterly volatility associated with the timing of channel stocking and de-stocking. Consequently, this year\u2019s first quarter sales will include our Early Buy program but will not include channel inventory builds to the same degree as in 2024. This strategy will change the quarterly timing of 2025 sales as compared to the prior year, with approximately $40 million shifting out of the first quarter into the remainder of the year. As a result, we are guiding to first quarter 2025 revenues of between $325 million and $330 million, with second quarter revenues expected to be at similar levels to last year\u2019s, followed by very strong year-on-year comparisons in the second half of 2025. Capital expenditures are expected to be approximately\u00a0$200 million\u00a0primarily tied to the development of our new\u00a0Arkansas\u00a0campus, including the addition of a warehouse facility,\u201d continued Mr. Fairbanks.<\/p>\n \n\u201cOur market leadership, brand equity and reputation, and robust product portfolio have attracted the largest and most trusted network of distributors, dealers, and home centers in North America. Together, we are positioned to capture the greatest share of the industry\u2019s growth opportunities. Demonstrating our continued confidence in the long-term outlook for the Trex Company, we returned $100 million to our shareholders through the repurchase of 1.6 million shares of our outstanding common stock in 2024,\u201d Mr. Fairbanks concluded.<\/p>\n Fourth Quarter 2024 Conference Call and Webcast Information<\/span><\/b><\/p>\n \nTrex will hold a conference call to discuss its fourth quarter 2024 results on Monday, February 24, 2025, at 5:00 p.m. ET. To participate on the day of the call, dial 1-844-792-3734, or internationally 1-412-317-5126, approximately ten minutes before the call, and tell the operator you wish to join the Trex Company Conference Call.<\/p>\n \nA live webcast of the conference call will be available in the Investor Relations section of the Trex Company website at 4Q24 Earnings Webcast<\/a>. For those who cannot listen to the live broadcast, an audio replay of the conference call will be available within 24 hours of the call on the Trex website. The audio replay will be available for 30 days.<\/p>\n Use of Non-GAAP Measures<\/span><\/b><\/p>\n \nThe Company reports its financial results in accordance with accounting principles generally accepted in the United States (GAAP). To supplement our consolidated financial statements reported on a GAAP basis, we provide the following non-GAAP financial measures of earnings before interest, income taxes, depreciation and amortization (EBITDA), and EBITDA as a percentage of net sales, EBITDA margin. Management believes these non-GAAP financial measures provide investors with additional meaningful financial information that should be considered when assessing our underlying business performance and trends. Further, management believes these non-GAAP financial measures also enhance investors\u2019 ability to compare period-to-period financial results. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company\u2019s reported results prepared in accordance with GAAP and are not meant to be considered superior to or a substitute for our GAAP results. Our non-GAAP financial measures do not represent a comprehensive basis of accounting. Therefore, our non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of these non-GAAP financial measures to GAAP information are included below. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the Company\u2019s performance. Disclosing these non-GAAP financial measures allows investors and management to view our operating results excluding the impact of items that are not reflective of the underlying operating performance.<\/p>\n \nReconciliation of net income (GAAP) to EBITDA (non-GAAP) is as follows:<\/p>\n\n
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